As a project manager, one of the most critical parts of your job is selecting the right subcontractor for your project. Just like the varied nature of our projects, subcontractors are also different in terms of their portfolios, expertise, and methodologies. This is why it’s highly important to set a proper evaluation process for selecting the right team to bring your construction visions to reality.
Multiple subcontractors will send out respective bids for your evaluation during the selection process. Some subcontractors offer outstandingly detailed proposals. They’re well-written, cover all of the job scopes for their portion of the project, and indicate a good understanding of the construction business. Some contractors hand in lacking bids.
You might immediately evaluate that the more professional and detailed the proposal is, the better the workmanship of the specific contractor. However, that’s not necessarily the case. Some subcontractors operate a small office with few staff for administrative duties, such as construction bid preparation. However, their specialty is in a specific type of project or trade. Regardless of their construction proposal, their workmanship might be exceptional, which you’re carefully looking for in a winning bid.
In this article, we’ll guide you through your subcontractor selection process and show you the red flags and green flags of subcontractors. This way, you will know what to look for when you pick a subcontractor for your next construction project.
What are the Red Flags in Subcontractor’s Proposal?
Hiring the right subcontractor is very critical to the success of a construction project. Their task, after all, is executing your construction project and the team’s vision. It’s important that you can confidently count on them to carry out the work according to the intended scope and maintain a high standard of work that you are paying them to do.
Most project managers have horror stories about awarding a subcontractor to the wrong set of job scopes. Some of the most common negative comments that came from working with the wrong contractor include the following:
Incomplete Projects
In worst cases, subcontractors have failed to complete a project. This might be due to a subcontractor’s lack of reliability, inferior workmanship, or improper project closeout. This could mean going severely over budget and hiring a new subcontractor to complete the work, especially if the original subcontractor has already been paid for a portion of the work that’s been left behind.
Poor Communication
Your subcontractors may use communication techniques unfamiliar to those your company implements, and they may not use the same technology. If there are barriers to communication with the rest of the team, updated plans can get missed, and confusion in project details can cause costly mistakes. Communication problems can also occur from frustration, resulting in personality clashes on the job site. Collaboration and a good rapport between team members are essential aspects of an effectively run job site, and without them, projects will undoubtedly suffer.
Scheduling Delays
Construction schedule delays cost more than time–they cause a large headache in managing the rest of the subcontractors and their portion of the project scope. Not to mention, adding more time to your timeline also means cost overruns to your project. Contracting with a subcontractor that’s unreliable in their construction crew scheduling can cause a domino effect on your overall timeline, pushing back the rest of the project or needing overtime hours in other areas.
Inferior Workmanship
The last thing you want to do for your project is to hire untrained and incompetent subcontractors. This might be a matter of ineptitude or cutting corners on the job scope for a project they’ve been hired to be a part of. Whatever the reason may be, poor workmanship will cost you money and time, damage your company’s reputation, and require extensive rework to meet the requirements of their scope of work.
Safety Concerns
In managing construction, proper protocol and crew training means following safety regulations. A poor subcontractor or a contractor who hires inexperienced trade contractors might pose safety risks, such as not cleaning the job site or being non-compliant with OSHA standards. This can put your other crew and overall company at risk physically, financially, and legally.
Legal Disputes
Construction is a government-regulated industry, so adopting contracts covering your company’s legal requirements is essential. In some severe cases of contracting with the wrong subcontractors, disputes can occur, causing legal disputes that can be costly and take a long time to resolve. Therefore, always aim for stakeholder-friendly contracts when you can, which benefit the owners, general contractors, and subcontractors alike.
What are the Green Flags to Look for in a Subcontractor’s Proposal?
If you’re not familiar with the subcontractor, the construction bid proposal will give you a general understanding of the company you’re hiring so you can make the right decision.
Good Understanding the Scope of the Work
The way that a bid usually presents information is a reliable indication of the company and its comprehension of the project. On the other hand, this construction proposal shows that the company grasps the scope of work for a project. However, the level of detail depends on a few factors. Was the subcontractor furnished with comprehensive construction crew scheduling, scope of work, trade plans, drawings, and specifications prior to bidding? This is because some projects have that level of information available from the get-go, so those things should be kept in mind when reviewing the proposals.
Error Free Proposals
We understand that some contractors may be unable to write excellent business proposals. That might be okay if they are accurate in what’s included in their final bid estimate, but if the proposal is full of errors and omissions, this might be a sure sign that they’re not what you’re looking for.
The actual construction proposal can provide a good grasp of a subcontractor’s professionalism overall. The prices will often give you a good indicator of their expertise, man hours they estimate, and material schedule in construction projects, man hours they estimate. While these two factors are important, use your personal assessment of their written proposal as a sort of company introduction. Don’t make your decision based only on the professionalism of the submitted proposal itself. Regardless, if you see a lot of errors, dig deeper to find out why before making the final selection.
Proper Pricing Details
While pricing is not the deciding factor in selecting a proposal, it is still an important factor to consider.
Instead of looking at how high or low the contractor is bidding, it’s vital to see how the price is computed and how the budget is broken down and allotted. The overall price itself has some indicators that can give you a feel for how professional and knowledgeable a subcontractor is.
For example, a bid that is far too low might show that they don’t have much experience with estimating or are lowballing the budget in other ways, such as through change orders. It might also reflect that they are missing a portion of the scope of work, which could create disputes and legal issues down the road. On the contrary, a bid that’s far too high might not fit into your intended budget for the project and can also show that the contractor doesn’t understand the project they’re bidding on.
Nevertheless, the more accurate a bid is on price, the better the chances the subcontractor understands the project’s scope of work. No matter what the cost is in the submitted proposal, do your due diligence to find out the “why” when making your decision.
Reliable Credentials, Certifications, and References
On any construction project, you will likely get more than a few proposals from subcontractors. While the proposal should contain most of the information you need about a subcontractor’s ability to handle the project, you should carefully evaluate your top picks before making the final call. For instance, the decision-making process must include checking the company’s references, credentials, and certifications.
While looking for the best subcontractor for this project, you should also consider long-term relationships with dependable companies. Sometimes, that means relying on newer contractors who are just starting, even if their proposal might not be the fanciest). Sometimes, however, it will come from tried and true subcontractors with a good track record.
Additionally, here are some things to verify before awarding the to a subcontractor:
Better Business Bureau Rating
When making the selection, this should be one of the first things you check. Basically, a poor rating is a red flag. In today’s digital world, you should also do a quick search of their website and see any online reviews to get an overall feel for their work if it’s available.
Construction Crew Scheduling Methodology
Does the subcontractor depend on a printed s-curve posted in the headquarters for their crew members’ schedule? Or are they using innovative tools to keep up with unexpected factors and adjust as needed? Ensure your chosen firm has the right tools to do their work efficiently.
EMR Rate
Always ask for their Experience Modifier Rate (EMR). Generally, the EMR rate is a record of the subcontractor’s safety record. A good safety record will decrease your insurance cost and overall risk.
Key Takeaway
At times, managing construction projects can feel a bit like playing a game of luck. You sometimes need those perfect storms to come together at the right time to win. As essential players in the game, you need subcontractors to be your teammates, reliable construction crew management software to help you plan, and ultimate trust in your gut. In the end, the right subcontractors with a winning proposal will reduce your project risk and improve your chances of achieving project success.
As such, reviewing each proposal carefully is vital when searching for the right subcontractor. With Pro Crew Schedule, we make this easy. Our software streamlines communications with subcontractors and reduces paperwork, providing a centralized online platform for accessing, reviewing, managing, and archiving proposals.